Virgin overhaul gets rid of the baggage

From ditching its VIP lounge and $400K celebrity menu to sending planes back, the new Virgin Australia will look very different.

The sale of Virgin Australia to Bain Capital will mark a new beginning for the carrier. Picture: Lyndon Mechielsen

Virgin Australia is poised to undergo its second major transformation in 10 years to rebuild the carrier into a leaner, profitable business.

Under new owners Bain Capital, at least some of the work done by former CEO John Borghetti — who overhauled the airline from budget to premium — will be undone.

It’s almost certain that his exclusive VIP lounge The Club will be the first addition to go, closely followed by the $400,000-a-year contract with “celebrity chef” Luke Mangan who has overseen the Business Class menus for the airline since 2011.

Dozens of aircraft will be sent back to lessors, including A330s fitted with Business Class suites resembling the interior of Mr Borghetti’s beloved Porsches.

Boeing 777s, Embraers and ATRs could also be axed from the fleet, leaving Virgin 2.0 with between 60 and 70 Boeing 737-800s — about half their current fleet. While that might sound like a lot, Bain’s Australian managing director Mike Murphy has suggested that they will operate 40 to 50 aircraft on a day-to-day basis, with the remainder on standby for those inevitable technical issues. It is a strategy designed to ensure a high reliability of service, which was one of the top priorities of customers identified in research undertaken by Bain.

Dozens of aircraft will be sent back to lessors, including A330s fitted with Business Class suites resembling the interior of Mr Borghetti’s beloved Porsches. Picture: Virgin Australia

Low-cost carrier Tigerair and its few remaining A320s will be consigned to history, with Bain focused on making a success of one airline that serves all segments of the market, including the corporate sector, small and medium enterprise, leisure travellers and those visiting friends and relatives.

For passengers, Bain has promised an airline that does not compete head on with Qantas in the “high-value corporate end of the market” and does not bump noses with low-fare carrier Jetstar.

The small business class section of Virgin’s 737-800s should be maintained, coupled with a range of different economy fares pitched at customers ranging from those who want the bare minimum of everything to those who want a more premium experience.

With markedly fewer aircraft and, for the short-term at least, a purely domestic network, the 9000-member workforce is expected to be cut to between 5000 and 6000.

That figure will include about 10 pilots per aircraft, along with cabin crew, ground handlers, engineers and customer service staff, as well as corporate and head office employees.

One of the features of Bain’s proposal understood to have impressed Virgin Australia management is the company’s commitment to investing in technology.

A considerable upfront investment is expected in IT to make the Virgin Australia website and booking portal a better customer experience.

This will extend to the Velocity frequent flyer program.